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Developments within the semiconductor industry constitute one of the most interesting sub-plots of the rapid innovation in the high-tech industry. As pressure continues to achieve higher levels of device integration while reducing cost, and size and complexity, the issue of process innovation has become very significant. Plus, economic and market forces are fueling growth. To accommodate exponential growth demands for larger and faster transistors, Chip designers and manufacturers have constantly pushed the envelope of technological, physical, and design constraints. Various innovations and paradigm-defining ideas have taken shape as a result. The embedded systems concept is one significant trend in this context.

Global Phenomena
According to a new report, Future of Embedded Systems Technology from BCC Research Group, the worldwide-embedded systems market was estimated at $45.9 billion in 2004. Expected to growth at an average annual growth rate (AAGR) of 14% over the next five years, this market will reach $88 billion by 2009.

Indian Scenario:
Today, Indian design organizations are moving beyond simple labor cost arbitrage to becoming true contributors to product innovation. In fact, a number of marquee brands have invested in new design operations in India or significantly expanded existing facilities. These companies include Agilent, Via, Dell, Rambus, Windriver, Elven, Wolfson, Austria Microsystems, Tensilica and Sandisk. And it is not just captive design units that are expanding at a furious pace. Third-party outsourced design service providers based in India are also on a tear. For e.g.: Elven acquired Indian Operations of AMCC, Inc., USA, NASDAQ-listed supplier of network processors. Recently, Elven also acquired C2Silicon, a privately owned company out of Bangalore in the same space to beef up their design service offerings.
Indian players are setting up captive design centers where it is critical for IP protection, and simultaneously teaming up with third-party design services to enable ‘bread and butter’ engineering development. The mid-size semicon companies (mainly the fabless types) tend toward third-party design service providers since it cuts cost of operations—and adds directly to the bottom line.
Earlier this year Aftek Ltd announced its plans to acquire its 25% owned Indian design outfit, Elven Micro Circuits Pvt. Ltd., to strengthen its service offerings in the automotive electronics, Wired, Wireless and Mobile Networks segment.
Experts believe, the evolution of skill sets at Indian design companies is blurring the line between chip design and embedded system design.
Concurrently, the demand for design services is also becoming geographically diversified. Like Elven merging with Aftek Ltd will ensure a higher speed of IP development with larger resource base and wider markets and client base to cover. Offering their current and potential clients a much more enhanced value proposition with a full chip embedded solution. Aftek will be able to gain entry into new markets like Japan while Elven will be able to enter the European markets, hence covering larger grounds with direct impact on the top and bottom lines of the business.

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